According to DB, key issues are: soft European pulp demand and an uncertain global environment.

"We’ve heard reports of high pulp inventories in China, but these are difficult to substantiate," said Mark Wilde, senior analyst at Deutsche Bank covering the paper and forest products sector. "Canfor’s $50/mton price cut in NBSK for China (new price level is $790/mton) for October underscores weak demand. Canfor had earlier announced flat prices to China for October. We continue to monitor FX movements closely."

Containerboard
"Domestic demand is relatively stable and prices are flat," Wilde said. "However, signs from global markets suggest that pressure on domestic prices is apt to increase as we move thru 4Q/1Q 2012. Demand has weakened in key global markets and export prices are down about $20-50/ton. Any pressure from lower containerboard prices will likely be partially offset by lower OCC costs."

"According to the American Forest & Paper Association, September shipments were down 4.7% y/y, -6.8% m/m and YTD -3.0% y/y, " Wilde said. "With demand weak, discounts appear to be increasing. Even with the recent closures, there appears to be excess UFS supply in the domestic market."